BNSF Logistics Makes Logical Connections

One of the most important and challenging aspects of the business world is getting products from one place to another.

And according to the logistics industry, one of the best at helping businesses get products from point A to point B is BNSF Logistics LLC of Springdale.

BNSF — which provides modal solutions, transportation execution, supply-chain services and consulting — has become a major player on the logistics scene since its incorporation in August 2002. For the past two years, BNSF has been recognized by Inbound Logistics, a logistics trade group and magazine, as one of the top 10 3PLS (third-party logistics) providers.

Eric Wolfe, vice president and general manager of BNSF, is determined to make sure his company keeps its status.

“We’re constantly prospecting and developing new business,” he said.

One way BNSF applies its broad approach is the acquisition of other operations. The company has facilities in Van Buren, Alabama, Pennsylvania, Illinois, New Jersey and Ohio. Most of those locations are logistics businesses that have been acquired since 2002.

And more regional acquisitions are in the works, Wolfe said, though he couldn’t talk about any specifics.

“We expect to have an announcement on the closing of another deal by the end of [June],” he said.

This wide base helps BNSF route goods not only to places all across the United States but also to Mexico and Canada.

The company did business with about 900 different clients last year, Wolfe said.

According to a March report by Armstrong and Associates Inc., a Stoughton, Wis., supply chain market research and consulting firm, those included the likes of Wal-Mart Stores Inc., U.S. Borax, Lowe’s Companies Inc., Louisiana-Pacific Corp. and Home Depot U.S.A. Inc.

Logical Business

Five white placards are posted in BNSF’s lobby. They’re repeated throughout the cubed offices. In bold black letters they read: “Right product. Right place. Right time. Right cost. Right condition.”

BNSF Logistics is a wholly owned subsidiary of Burlington Northern Santa Fe Corp. of Forth Worth. Burlington Northern’s main business is railway transportation, and it has contracts to supply intermodal transportation for J.B. Hunt Transport Service Inc. of Lowell.

According to Burlington Northern’s annual report, the company’s “other revenues,” those not directly tied to freight, increased 87 percent to $381 million for 2005.

“This increase was primarily attributable to increases in storage-related revenues and volume growth, in addition to the acquisitions and volume growth of BNSF Logistics …” the company stated in the annual report.

Burlington Northern Santa Fe posted net income of $1.53 billion for 2005, up from $791 million a year prior.

According to the Armstrong and Associates report, the logistics arm alone had gross revenues of $158.6 million in 2005 and “is on track to generate revenues of $190 million in 2006.”

Wolfe said the logistics subsidiary employs about 190 people with about 70 of those in Springdale, and he just signed a lease with his landlord to occupy another 2,550 SF, bringing the Springdale office to a total of 15,700 SF.

Seasonal Switch

Yancey Bowen is a regional director for BNSF and deals with a large portion of the company’s retail customers.

Bowen said there are two major segments of the business: supply-chain services, which handles long-term contracts and usually takes on all the transportation needs of a client; and the transportation execution segment, which means shorter term contracts dealing with spotty “on-the-fly” transportation needs.

Bowen said the execution segment is largely seasonal with three main seasons: the spring lawn and garden merchandise season, summer back-to-school season, and Christmas season.

BNSF also has its teeth in a rarely thought about niche, Bowen said. The company arranges to ship many retail stores’ fixtures, such as shelving units and display cases. BNSF arranges for a shipper to pick up the fixtures from the manufacturer and get them to the site as quickly as possible.

“There are crews standing around waiting on those,” Bowen said.

As of mid-June, Bowen said many retailers were building new stores and remodeling old stores across the country.

BNSF’s Web site lists several company strengths, but Wolfe wanted to stress one in particular: “Flexibility,” he said.

“Our greatest asset is the high degree of flexibility that we offer a company in managing its transportation needs,” Bowen said.

BNSF has to be flexible because it handles all types of products.

“Everything — literally everything,” from food to furniture to dealing with major retailers, Wolfe said when asked what types of cargo BNSF helps transport.

Wolfe also said that making adjustments and strategic moves precision, are key factors in helping BNSF stay ahead.

Flexibility and making adjustments come in handy in the logistics business because of unforeseen circumstances and natural disasters such as Hurricane Katrina.

Wolfe said a disaster like Hurricane Katrina “definitely affects what we do,” adding that there is a “ripple effect.”

Not discounting the humanitarian aid needed in the Southeast last year, he said the storms that ravaged the Gulf Coast were a drain on his company’s capacity. But the drain, he said, created other opportunities in other parts of the country.

Overall, BNSF’s business “leveled out” from the storms, but he would rather have skipped the devastation.

As hurricane season gears up for 2006, Wolfe said many of his customers were already making preparations. Many were talking about it four or five months before the season officially started, he said.

As best as he can tell, many retailers with operations in affected areas are now making contingency preparations year round, he said.

Wolfe said that on the whole, logistics companies have less capacity and there is a slow down in infrastructure, which forces businesses like BNSF to make adjustments and develop alternative routes.